JPMorgan: AI Stock Selloff May Be Near Exhaustion as Hedge Fund Longs Unwound

JPMorgan strategists said the selloff pressure on AI-related equities may be nearing its limit, as investors have sharply cut equity exposure since mid-September, according to a report cited by Investing.com on Thursday. The bank's aggregate equity positioning gauge has fallen well below its recent peak, suggesting prior elevated exposure has been digested, though the assessment does not signal an end to short-term volatility. On financing concerns around neocloud providers, JPMorgan said their funding challenges are unlikely to derail the broader AI capital expenditure cycle, as their share of the AI ecosystem remains small and replaceable. Global listed tech companies generate roughly $2.2 trillion in cash flow against about $1.8 trillion in capex this year, with neoclouds accounting for approximately $30 billion and $80 billion, respectively. Strategists led by Nikolaos Panigirtzoglou said AI infrastructure buildout can be absorbed by stronger-balance-sheet cloud majors, with tech-sector cash flow exceeding capex by about $400 billion. Semiconductors, roughly one-fifth of global equity risk capital, remain a volatility source, but hedge funds and CTAs have largely unwound crowded long positions, potentially easing selling pressure.